'Places' Can Harness Mainstream For Location-Based Services

Last month, Facebook announced its "Places" product, essentially a location-based feature that allows users to share their locations among their network of friends. Places is not about broadcasting your locations to everyone but about sharing your locations within your network -- family and friends you trust and want to facilitate communication.

According to Facebook founder Mark Zuckerberg, Places was created for three purposes: 1) To help people share their locations socially with friends; 2) To let users see who is located around them so they can connect in the real world; and 3) To share and see where your peer group is going so you can learn and discover new places.

Places is different from the current location-based social services, like Foursquare and Gowalla, in that it's not about creating a "game" around locations or "rewarding" users for checking-in. These types of services reward users with discounts, freebies and symbolic badges for frequenting locations. Places is simply about sharing location-based experiences within the Facebook network.

So why is the Facebook Places announcement such a big deal, especially with other products like Foursquare offering loyalty incentives and even discounts for users? Simple: Facebook's sheer size and influence. With Facebook joining the location-based game, you'll see a much more rapid adoption of location services among social users, which will benefit both the users and the businesses participating. Facebook can truly take location mainstream.

Although Foursquare and others have seen tremendous growth during the past six months, they still have an extremely small base as compared with the estimated 830 million "unique" users of social networks worldwide (Morgan Stanley, 2010). Foursquare currently has 3 million users and approximately 15,000 venues/businesses participating.

Facebook, as we all know, cites more than 500 million users and growing. Facebook's mere presence in location-based services sheds a light on the early adopter services and will help drive adoption for "early adopters" to mainstream. In fact, the day of the Facebook Places announcement, Foursquare had its largest user increase. (Foursquare, Gowalla, Yelp and Booyah were all present at the announcement as "partners.")

Additionally, Facebook is also bringing "tagging" to Places, which really makes it unique and truly socially. Users can "tag" the friends with them at locations and message via all their newsfeeds. Even if you don't have a smartphone to access Places, you'll be included in the "Places" conversations by virtue of being tagged. It works exactly like the "tagging" function in photos.

So what does this all mean for teens and marketers wanting to reach them? Location-based marketing (let's call it messaging) is set to explode during the next year and beyond. Why?

1) Teens are one of the most active demographics across social networks, with 75% of online teens, ages 12-17, using social media daily (Pew Research, Feb. 2010);

2) Teens are increasingly almost inseparable from their phones and as recently cited by eMarketer, 66% of children ages 8 to 18 owned a mobile phone in 2009, up from 39% in 2004 (Kaiser Family Foundation);

3) The projected proliferation of smartphones across the board, especially with the teenage demographics, will further push location services, with smartphones becoming the norm.

The potential for marketers reaching teens through social location is huge. As the teen user base grows, marketers will have more ways to reach teens exactly where they are ... in real-time, in the real-world. A note of caution, however: Marketers must be sure their messages are informative and rewarding ... not seen as explicit advertisements. If done correctly, it's like having a brand ambassador alongside every teen's smartphone. (And that goes for other demos, too.)

A few weeks ago my daughter's friend went shopping for back-to-school clothes. She checked-in at American Eagle and soon after received a 15%-off coupon via her phone. That coupon made the difference in making an actual purchase or simply passing. Originally set on buying only one item, she walked out with two. Why? That conveniently timed and targeted coupon was the proverbial tipping point. Additionally, she shared her check-in and her 15%-off deal with friends. Sharing with her peer group sent this deal virally throughout her network of friends, generating a very direct personal recommendation.

Experiencing location-based services with your teens is a must. With anything "new" in today's world, especially technology, parents need to be involved and informed. Despite Facebook's security and privacy settings, parents should still be active and engaged with their social media and Internet activities, especially one that alerts an individual's location in real time. As a father of six, my family's experience with all things social has been excellent, enhancing our communications and overall life experiences. But I also keep a close eye on what my kids do and say on social networks.

What's next for check-in services? Judging from recent news, it looks like TV. Fox and other networks are partnering with services like GetGlue to bring location to TV, allowing users to check-in to shows and receive rewards through loyalty programs. Facebook recently bought check-in-to-anything service Hot Potato, signaling their ongoing interest in location.

For sure, location is and will continue to be a hot topic. As we watch user participating grow, marketers will soon have a mass targeted audience that delivers on scale and reach ... one that will help drive sales and your bottom line. And you can thank Facebook for helping kick that in to full gear.

While I agree that location-based services are on the rise, the value equation for consumers isn't there for Facebook. And simply because they have scale does not mean that consumers will adopt it. To truly get mass adoption, brands will have to offer incentives for sharing location, just like many brands are offering special discounts or coupons for liking them on Facebook.

I believe the next evolution of location-based services is a private check-in - integrating with loyalty programs with additional incentives for sharing to social networks.

Checking in via Facebook Places is going to clog up everyone's Facebook feed and quickly grows old for everyone - friends and users. This is something Foursquare & others recognized very quickly when building out their products - thus, the incentives and gaming components.

According to recent research (http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=135743) 40% of consumers are fans of brands to receive incentives and discounts.

You mention that Facebook Places isn't about incentives, yet the American Eagle example clearly included a discount component to drive purchase.

I'm interested to hear the details around how the consumer received the coupon via the mobile phone, because it's a program they would need to opt in to as part of a loyalty or other program. How wast he coupon shared with the group? Posted back on her own Facebook wall, forwarded via text message?

I'm not a big fan of the tagging concept within Facebook Places - just too many risks involved from a privacy & security perspective.